Summary
Monster Beverage Corp. (formerly Hansen Natural Corporation) reported solid revenue growth in the second quarter of 2010, with net sales increasing by 21.8% year-over-year to $365.7 million. This growth was primarily driven by strong performance in its core Monster Energy® brand, complemented by newer product lines like Nitrous™ Monster Energy® and Peace Tea™. Despite revenue growth, net income saw a slight decrease of 2.5% for the six-month period ended June 30, 2010, reaching $96.4 million. This was largely due to a significant increase in operating expenses, including higher marketing, payroll, and professional service costs, as well as a higher effective tax rate resulting from the establishment of a valuation allowance for a foreign subsidiary's deferred tax asset. The company maintained a strong liquidity position with substantial cash and cash equivalents. Investors should note the ongoing legal proceedings, particularly the class action lawsuit concerning Blue Sky beverage labeling, and the company's significant investments in auction rate securities which continue to present some liquidity and valuation risks, although management believes these will not materially impact overall liquidity.
Financial Highlights
47 data points| Revenue | $365.70M |
| Cost of Revenue | $172.35M |
| Gross Profit | $193.35M |
| Operating Expenses | $83.67M |
| Operating Income | $109.68M |
| Net Income | $63.84M |
| EPS (Basic) | $0.06 |
| EPS (Diluted) | $0.06 |
| Shares Outstanding (Basic) | 1.06B |
| Shares Outstanding (Diluted) | 1.12B |
Key Highlights
- 1Net sales grew 21.8% to $365.7 million for the three months ended June 30, 2010, compared to the prior year, driven by increased volume of Monster Energy® brand products.
- 2Operating expenses increased by 21.2% for the quarter, impacting profitability despite higher sales.
- 3Net income for the six-month period decreased by 2.5% to $96.4 million, primarily due to increased operating expenses and a higher effective tax rate.
- 4The company's DSD (Direct Store Delivery) segment continues to be the primary revenue driver, accounting for 93.3% of net sales in the quarter.
- 5Cash and cash equivalents increased to $409.9 million as of June 30, 2010, indicating a strong liquidity position.
- 6The company is involved in several significant legal proceedings, including a class action lawsuit concerning Blue Sky beverage labeling, which is progressing through the courts.
- 7Investments in auction rate securities continue to be a point of focus, with failed auctions and impairment charges impacting their valuation, though the company has a put option for a portion of these securities.